This article identifies the emergence of the institution-based view as a third leading perspective in strategic management (the first two being the industry-based and resource-based views). We (a) review the roots of the institution-based view, (b) articulate its two core propositions, and (c) outline how this view contributes to the four fundamental questions in strategy. Overall, we suggest that the institution-based view represents the third leg of a strategy tripod, overcomes the long-standing criticisms of the industrybased and resource-based views ’ lack of attention to contexts, and contributes significant new insights as part of the broader intellectual movement centered on new institutionalism.

Abstract. This article focuses on a key question: Why do strategies of firms from different countries differ? Drawing from recent research on business strategies in Asian organizations, this article outlines the emergence of an institution-based view of business strategy which sheds light on why firms differ, reviews four streams of research in a broad range of countries, and critiques and extends some of the current work by suggesting a number of future research directions. Keywords: institution, business strategy, Asia This article focuses on a key question: Why do strategies of firms from different countries and regions differ? This is the very first question among the five most fundamental questions in strategic management raised by Rumelt, Schendel and Teece (1994:564). 1 Since the diversity of firm strategies around the world can arise as the result of many possible forces internal or external to the organization, this question engenders a wide variety of disparate answers from economists (Nelson, 1991) and sociologists (Carroll, 1993). Thus far, strategy researchers have primarily focused on industry conditions (Porter, 1980) and firm resources (Barney, 1991) as drivers of firm differences, leading to competition- and resource-based

The behavioral theory of the firm rests on empirical observation of economic behavior in organizations, and was motivated by the 'disconnect ' between that observation and prevailing economic theory. We believe that there is a comparable tension between reality and theory with regard to the persistent, systematic relationships between organizations. Observation belies the traditional view that organizations are distinct and autonomous units of action. Instead, it appears that they are very often embedded in organizational groups comprised of close, robust and multidimensional ties that blur hierarchical boundaries (Granovetter 1994; Gulati & Gargiulo 1999; Powell & Smith-Doerr 1994). These groups, which we call interfirms, demand analysis. Why do they exist at all? What processes cause them to take the forms that they do? Under what circumstances are they more or less useful for their constituents? In this chapter we offer answers to these questions. Our approach to explaining interfirms builds on earlier arguments regarding the existence, structure and behavior of firms. First, we explain the existence of interfirms as a response to the transaction costs that emerge under conditions of bounded rationality. This argument locates the interfirm within broader justifications for institutions, which build on Coase’s ([1937] 1988) transaction cost explanation for the firm. Next, we offer an evolutionary process model of the emergence of one type of interfirm, the network organization – a production

The use of customer service ideas in government continues to be widespread although the concept and its implications for public sector service production and delivery remain poorly developed. The paper presents a series of paradoxes related to customer service and its use in government. The central and most troubling paradox is that customer service techniques and tools applied to government may lead to increased political inequality even as some aspects of service are improved. The argument is structured by examination of the following: the predominant structural features of service management in the private sector, the assumption that customer satisfaction is a central objective of service firms, the understanding of customer service that informs current federal reform efforts, and the operational and political challenges of customer service as a public management objective.

We introduce a collective action model of institutional innovation. This model, based on converging perspectives from the technology innovation management and social movements literature, views institutional change as a dialectical process in which partisan actors espousing conflicting views confront each other and engage in political behaviors to create and change institutions. The model represents an important complement to existing models of institutional change. We discuss how these models together account for various stages and cycles of institutional change. McAdam (1982) discusses the sit-ins, boycotts, voter registration drives, court actions, and other tactics used during the Civil Rights Movement between 1955 and 1965 to push for desegregation and equal rights. He observes that, at first, the movement was composed of many black colleges, black churches, and local chapters of the NAACP, each undertaking localized protest activities. These groups gave rise to more formal and well-known groups, such as the

this paper, we look at the response of two user industries, electronics and automobiles, to the restriction of, and ensuing global ban on, chlorofluorocarbons (CFCs) in the late 1980s. Both industries ultimately responded successfully to the global ban by developing alternative technologies to CFCs. However, large multinational firms within the two industries differed in the nature and timing of their response to the phase-out of CFCs. Large electronic firms considered the global restrictions as a challenge, and moved swiftly to develop alternatives to CFC-based chemicals. Many of the large automotive companies, however, delayed in making a commitment to air conditioning systems that ran 3 on CFC substitutes, despite the fact that delays could potentially cause a large and costly retrofit problem for the industry

An attempt is made in this article to explain the amazing growth of the consultancy market. Five different perspectives are chosen: a sociological view on the growing complexity of the environment, an analysis of what functions consultants perform for their clients and of how they enhance the demand for these services, a discussion of what difficulties clients may face when trying to evaluate the consultants' performance and, finally, a psychological view on managers' decision to increasingly and repeatedly contract consultants. A model is then proposed that draws on this analysis and offers a dynamic explanation of the "consulting explosion".

Powell consider the possibility of a micro-sociological supplement to the macro-sociological focus on structure, order, and persistence that has so far dominated research and theory in the new institutionalism. Searching for some answers, they analyze transformations in sociological theory since Parson's theory of action that offer alternatives to the Parsonian emphasis on norms and roles. They suggest that elements necessary to a "theory of practical action " compatible with the new institutionalism can be found in the more recent cultural turn in contemporary social theory that 1) "emphasizes the cognitive dimension of action to a far greater extent than did Parsons, " and 2) "departs from Parsons ' preoccupation with the rational, calculative aspect of cognition to focus on pre-conscious processes and schema as they enter into routine, taken-for-granted behavior (practical activity) (1991: 22). " DiMaggio and Powell conclude that ethnomethodology (Garfinkel 1967) and phenomenology (Berger and Luckmann 1966), in combination, offer an alternative, but one that leaves important questions- how do the micro-processes of these theories produce social order, what is the role of interests and intentionality- unanswered. i They then consider three theorists whose work deals with the problem of social order in a way that gives some insight into micro-level sources of macro-level stability: Giddens on structuration; Goffman on ritual order; Collins on interaction ritual chains. Noting that, in common, these theorists make gains by

Although American Legal Realism fell on hard times, the objections of the Realists with legal formalism had substance earlier in the century and have substance today. As. developed in this paper, there are many parallels between Legal Realism and older style institutional economics. Both failed for lack of operationalization. The New Institutional Economics works out of a law, economics, and organizations perspective and takes operationalization much more seriously. This same approach could be applied to the concerns of Legal Realism, bringing added value in the process.

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